Question: please provide full solution Exercise 2: Set an arbitrage for European Put Option Prices; D=0; put price = 0.7$ Data: European put option, K =

please provide full solution

Exercise 2: Set an arbitrage for European Put Option Prices; D=0; put price = 0.7$ Data: European put option, K = $40 D = 0 So = $38 T = 0.25 Rf = 10% pla. Exercise 3: Arbitrage opportunities Suppose that = 5 SO = 30 T = 0.5 r = 12% K = 25 D = 0 What are the arbitrage possibilities when p = 2.5 ? p = 1.75 ? =

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